Chapter 13 Data Flashcards
-Apply the techniques used in pricing health and care insurance products in terms of data availability
General data considerations
- Data availability
- Making adjustments for credibility and relevance
- Projection to midpoint of insurance usage
- Group business
Data availability and criteria
- Important component of premium charge is the risk premium should be as accurate as possible for period of cover.
- most appropriate statistics should be used, should be relevant & credible
- cost of obtaining data
- & suitability of format in which data is in should be considered as well.
- actuary will use judgement in calculating statistics,
- using these to project data in order to estimate for future claims
Making adjustments for credibility & relevance
- adjust data to meet the requirement of exercise being performed.
- more accurate allowances can be made where insurer’s own experience is greater.
Projection to midpoint of insurance usage
- Claim incidence rates will vary by age & calendar year.
- Claim termination rates will also vary by duration from claim inception.
- CI incidence rates should be analysed & projected by each claim cause then combined.
- PMI incidence rates and average claim costs should be analysed and projected for each benefit of treatment category separately.
- Rates should then be projected to midpoint of insurance usage.
Group business
-Chapter 20 covers this
Own data characteristics
- Most relevant source of data
- may not be credible, especially if data is broken into many risk cells.
- It may need to be supplemented with external data
- actuary may need to make adjustments to external data to make it appropriate.
- cost, format & reliability should not cause problems.
- for new insurer the actuary will rely on other sources of data not internal.
Population data: merit and disadvantages
Disadvantages of population data:
- this will not be fully relevant to the insured lives or insurance products, eg claim definition.
- questionable accuracy and reliability
- inappropriate format
- may be out-of-date
Merit of pop data:
- It should be very credible
Reinsurers’ data merits
- The reinsurer should make the data as relevant as possible, although further adjustments may be needed for company’s specific underwriting & claims management.
- Reinsurance premiums will be based on premiums calculated by insurer hence determine treaty profits.
- Credibility will vary but more credible than own data
- reinsurer will likely provide data in return for a share of business.
Market data merit: Insured lives data
- this should be more relevant than population data as it is based on local experience of insured lives
- May not be relevant to individual insurers and by time it is published, may be out of date.
- it should be credible.
- draw back is remains market average doesnt relate to one insurer.
Data obtained from returns to the insurance supervisor merits and limitations
- These are likely to be accurate
- may be hard to extract useful information
- more likely to be used for an overall check of other data sources.
- the data has national relevance to company concerned. However care should be exercised since policy conditions might differ.
- This data should be more credible than insurer’s own data but less credible than population data.
Other sources of data
- overseas data
- actuarial consultants
- rate table software
- trade magazines
Overseas data merits
- may not be particularly relevant
- however may be credible
Actuarial consultants data merits
- similar to reinsurers’ data
- however likely to have less of an interest in risk
Rate table software data merits
- use to gather initial data
- or checking final premiums rates
Trade magazines data merits
-may be useful for checking final results
-will lack detail breakdown.
-will not include claim statistics but only level of benefits offered
and premium rates charge by other companies.
